Parques Reunidos Servicios Centrales, SA and Subsidiaries

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Parques Reunidos Servicios Centrales, SA and Subsidiaries Parques Reunidos Servicios Centrales, S.A. and subsidiaries Consolidated Annual Accounts 30 September 2018 Consolidated Directors’ Report 2018 (With Independent Auditor's Report Thereon) (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) KPMG Auditores, S.L. Paseo de la Castellana 259C 28046 Madrid Independent Auditor's Report on the Consolidated Annual Accounts (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) To the Shareholders of Parques Reunidos Servicios Centrales, S.A. Report on the Consolidated Annual Accounts Opinion __________________________________________________________________ We have audited the consolidated annual accounts of Parques Reunidos Servicios Centrales, S.A. (the "Company") and subsidiaries (together the “Group”), which comprise the consolidated statement of financial position at 30 September 2018, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and consolidated notes. In our opinion, the accompanying consolidated annual accounts give a true and fair view, in all material respects, of the consolidated equity and consolidated financial position of the Group at 30 September 2018 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and other provisions of the financial reporting framework applicable in Spain. Basis for Opinion _________________________________________________________ We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in Spain. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Annual Accounts section of our report. We are independent of the Group in accordance with the ethical requirements, including those regarding independence, that are relevant to our audit of the consolidated annual accounts in Spain pursuant to the legislation regulating the audit of accounts. We have not provided any non-audit services, nor have any situations or circumstances arisen which, under the aforementioned regulations, have affected the required independence such that this has been compromised. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. © 2018 KPMG Auditores S.L., a limited liability Spanish company and a member firm of Filed at the Madrid Mercantile Register in volume the KPMG network of independent member firms affiliated with KPMG International 11.961, Sheet. 90, Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Section 8, page number M -188.007, entry number 9 Tax identification number (N.I.F). B-78510153 2 Key Audit Matters ________________________________________________________ Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the consolidated annual accounts of the current period. These matters were addressed in the context of our audit of the consolidated annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recoverable amount of non-current assets (See notes 2 (c), 4 (e), 4 (f), 4(g), 6, 7, and 8) Key matter How the matter was addressed in our audit The Group has property, plant and equipment and Our audit procedures have comprised, inter alia: intangible assets amounting to Euros 1,413,946 • Understanding the control environment and thousand and goodwill amounting to Euros 555,169 assessing the design and implementation of thousand allocated to the related cash-generating the most relevant controls established by units (CGUs). For the purposes of evaluating Group management related to the process impairment, each park constitutes a cash-generating of estimating the recoverable amount of unit. In this regard, intangible assets (primarily intangible assets and other non-current administrative concessions) and goodwill have been assets, allocated to a significant portion of the CGUs. • Assessing the criteria used by Group management to identify indications of There is a risk that the carrying amount of cash- impairment in property, plant and generating units may exceed their recoverable equipment and intangible assets other than amount in those parks in which there is a decline in goodwill, the number of visitors. Factors such as the weather, • Assessing the methodology and investments in fixed assets in each park (CAPEX), assumptions used by Company competition or promotional and marketing activities management, with the involvement of our affect the number of visitors to each park. valuation specialists, to estimate the Group management, with the assistance of recoverable amount, by determining fair independent experts, calculates the recoverable value less costs to sell based on discounted amount of goodwill and tests property, plant and cash flows at cash-generating unit level, equipment and intangible assets for indications of • Comparing the forecasts of the main impairment on an annual basis, for the purpose of variables of the financial projections determining their recoverable amount. estimated in prior years with the actual data obtained, These recoverable amounts, estimated by • Contrasting the information contained in the determining the fair value less costs to sell, are model used to calculate the recoverable obtained based on the Projections approved by the amount with the Group's Projections Board of Directors, by applying valuation techniques approved by the Board of Directors, that require the exercise of judgement by the • Analysing the sensitivity of the estimated Directors and management and the use of recoverable amount to changes in the estimates. relevant assumptions and judgements, such 3 Recoverable amount of non-current assets (See notes 2 (c), 4 (e), 4 (f), 4(g), 6, 7, and 8) Key matter How the matter was addressed in our audit Due to the complexity of the calculation of the as the discount rate, the expected future recoverable amount, the high level of judgement growth rate and future cash flows. when estimating the key assumptions and the associated uncertainty, as well as the significance of We also assessed whether the information disclosed the carrying amount of the non-current assets, the in the consolidated annual accounts meets the valuation process regarding the aforementioned requirements of the financial reporting framework assets has been considered a key audit matter. applicable to the Group. Other Information: Consolidated Directors’ Report __________________________ Other information solely comprises the 2018 consolidated directors' report, the preparation of which is the responsibility of the Parent's Directors and which does not form an integral part of the consolidated annual accounts. Our audit opinion on the consolidated annual accounts does not encompass the consolidated directors’ report. Our responsibility as regards the content of the consolidated directors' report is defined in the legislation regulating the audit of accounts, which establishes two different levels: a) A specific level applicable to the consolidated statement of non-financial information, as well as certain information included in the Annual Corporate Governance Report, as defined in article 35.2. b) of Audit Law 22/2015, which consists solely of verifying that this information has been provided in the consolidated directors' report or, where applicable, that the consolidated directors' report makes reference to the separate report on non-financial information, as provided for in legislation, and if not, to report on this matter. b) A general level applicable to the rest of the information included in the consolidated directors' report, which consists of assessing and reporting on the consistency of this information with the consolidated annual accounts, based on knowledge of the Group obtained during the audit of the aforementioned accounts and without including any information other than that obtained as evidence during the audit. Also, assessing and reporting on whether the content and presentation of this part of the consolidated directors' report are in accordance with applicable legislation. If, based on the work we have performed, we conclude that there are material misstatements, we are required to report them. Based on the work carried out, as described above, we have verified that the information referred to in a) above has been provided in the consolidated directors' report and that the rest of the information contained in the consolidated directors' report is consistent with that disclosed in the consolidated annual accounts for 2018, and that the content and presentation of the report are in accordance with applicable legislation. 4 Directors' and Audit Committee's Responsibility for the Consolidated Annual Accounts _________________________________________________________________ The Company's Directors are responsible for the preparation of the accompanying consolidated annual accounts in such a way that they give a true and fair view of the consolidated equity, consolidated financial position and consolidated financial performance of the Group in accordance with IFRS-EU and other
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